Standing Committee E

[Mr. Joe Benton in the Chair]

Consumer Credit Bill

Clause 30 ordered to stand part of the Bill.

Clause 31 - Variation of standard licences etc.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe):
I beg to move amendment No. 3, in clause 31, page 24, line 2, leave out subsection (8) and insert— 
'''(8) Subsection (1) shall have effect in relation to a standard licence as if an application could be made for the renewal or further renewal of the licence on the same terms (except as to expiry) even if such an application could not be made because of provision made in a general notice under section 24A(5). 
(9) Accordingly, in applying subsection (1AA) of section 25 in relation to the licence for the purposes of this section, the OFT shall treat references in that subsection to the description or descriptions of business in relation to a type of business as references to the description or descriptions of business included in the licence in relation to that type of business, notwithstanding that provision under section 24A(5).''.'.

Joe Benton: With this it will be convenient to take Government amendment No. 4.

Gerry Sutcliffe: Welcome to the Chair, Mr. Benton. You will see that the Bill is making great progress, being properly scrutinised and being dealt with in a convivial manner.
Amendment agreed to. 
Amendment made: No. 4, in clause 31, page 24, line 13, leave out 
'because a person can no longer' 
and insert 
'simply because, by virtue of provision made in a general notice under section 24A(5), a person cannot'.—[Mr. Sutcliffe] 
Clause 31, as amended, ordered to stand part of the Bill

Clause 32 - WINDING-UP OF STANDARD LICENSEE'S BUSINESS

Amendments made: No. 7, in clause 32, page 24, line 20, after 'step', insert 
'for such period as it thinks fit'. 
No. 5, in clause 32, page 24, line 27, leave out subsections (3) and (4) and insert— 
'(3) Subject to subsection (4), where the OFT defers the taking of a step falling within subsection (2), the licence shall continue in effect for the period of the deferral— 
(a) on the same terms (disregarding the OFT's determination to take the step falling within subsection (2)); or 
(b) in the case of a step falling within subsection (2)(b), on the terms applied for; 
and, in the case of a step falling within subsection (2)(a) or (b), notwithstanding that apart from this subsection the licence would expire before the end of the period of the deferral. 
(4) Where the OFT defers the taking of a step falling within subsection (2), it may— 
(a) specify activities or descriptions of activities which are to be excluded from the activities authorised to be carried on by virtue of subsection (3); 
(b) specify requirements which must be complied with by the licensee during the period of the deferral in relation to the activities authorised to be carried on by virtue of that subsection; 
(c) terminate the period of the deferral if the licensee fails to comply with a requirement specified under paragraph (b). 
(4A) Under subsection (4)(a) an activity may be excluded for the whole of the period of the deferral or for only a specified part of it.'.—[Mr. Sutcliffe] 
Clause 32, as amended, ordered to stand part of the Bill. 
Clause 33 ordered to stand part of the Bill

Clause 34 - DEFINITE AND INDEFINITE LICENCES

Laurence Robertson: I beg to move amendment No. 32, in clause 34, page 27, line 39, at end insert—
'(1E) In all cases, the OFT shall state its reason for allowing for a limited period only, when the application was for an indefinite period, and those reasons shall be consistent with the guidelines the OFT itself sets out.'. 
I, too, welcome you to the Committee, Mr. Benton. As the Minister said, it has been conducted in a professional and convivial manner. I am sure that that will continue under your chairmanship. 
Amendment No. 32 deals with the length of time for which licences will be given. As I understand it, licences are currently renewed every five years. The clause will enable a move towards licences having effect indefinitely. However, there is a caveat, which is that the Office of Fair Trading can refuse to give an open-ended licence if it thinks that there is good reason why one should have effect for a limited period only. My amendment seeks to ask the OFT to state its reason for not giving an indefinite licence. 
I accept that there are many instances when the OFT should look at the way in which a licensee conducts business. One of the Bill's general objectives is to allow the OFT to do that in between issuing licences, as legislation permits at the moment, but on a rolling basis when those licences are indefinite. 
All I ask is that the OFT, when it varies the granting of indefinite licences, should give a reason for doing so. What I ask may be seen as yet another assault on the power of the OFT, and I make no apology for that. I have said previously, and will probably say again, that the OFT has too much power. It is rather a free spirit, and that has not always been to the benefit of the business that it is supposed to regulate. I make no apology for wanting to try to clip its wings a bit.

Gerry Sutcliffe: I recognise the spirit in which the hon. Gentleman moved the amendment—

Laurence Robertson: But?

Gerry Sutcliffe: The hon. Member for Tewkesbury (Mr. Robertson) is right; there will be a ''but''. The amendment is unnecessary, and I hope that he will bear with me as I explain why. I am aware of his  continuing diligence in watching the work of the OFT, and I have come well armed today with defences of that organisation's role. I am sure that we can look forward to further debate.
I agree that people should be told why they are granted a licence that is different from the one for which they applied. However, his amendment is unnecessary because the OFT already gives reasons for its licensing decisions. The decision to grant an indefinite or time-limited licence is no exception: that is good practice. 
Section 27(1)(a) of the Consumer Credit Act 1974 requires the OFT to give reasons for issuing a licence on different terms from those of the application. The amendment also mentions OFT guidance, and clause 30 requires the OFT to have regard to the most recently published guidance. Therefore the OFT is already required to do what the amendment proposes. I hope that I have explained that to the hon. Gentleman and that he will withdraw his amendment safe in the knowledge that he does not have to clip the OFT's wings on this occasion.

Laurence Robertson: The OFT may give reasons, but I do not know that it is required to do so. The Minister referred to the 1974 Act, which requires the OFT to give reasons. However, the Act does not refer to open-ended licences as they did not exist in 1974; the Bill will introduce them. My amendment is desirable for technical reasons, but on this occasion I shall not press it to a Division.

Gerry Sutcliffe: I am not trying to be dismissive, because the hon. Gentleman has a point that we shall consider in greater detail to ensure that it is covered. The aim is to strike a balance between the 1974 Act and the guidance contained in clause 30. However, we shall consider what the hon. Gentleman has said and not dismiss it out of hand.

Laurence Robertson: I am grateful for that explanation. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 34 ordered to stand part of the Bill. 
Clauses 35 to 37 ordered to stand part of the Bill.

Clause 38 - POWER OF OFT TO IMPOSE

Laurence Robertson: I beg to move amendment No. 46, in clause 38, page 30, line 30, leave out from first 'licensee' to end of line.
The clause gives power to the OFT to impose requirements on licensees. Proposed new section 33A(1)(a) will apply when the OFT is dissatisfied with any matter that is in connection with— 
''a business being carried on, or which has been carried on, by a licensee or''—
this is the crucial bit— 
''by an associate or a former associate of a licensee.''
The implication is that if the behaviour of a former associate of a licensee has been inappropriate, the OFT can impose requirements and either rescind a licence or not grant it. That is possibly unfair and rather open  ended. If by ''former associate'' is meant one who was an associate a month ago, the OFT probably has a right and a duty to investigate the relationship and perhaps to act on it. However, if an association ended a year, two years or five years ago, should the OFT still be required to investigate it? Should the OFT be given the same power to rescind the licence because of a relationship that existed a long time ago? 
I raised a point at our last sitting on clause 29(2A)(d) at the last sitting, which sets out some of the criteria for deciding whether people are fit to hold licences. One example that the OFT was considering was somebody who has practised discrimination on grounds of sex, colour, race or ethnic or national origin and so on. That is an all-encompassing subsection, and at the last sitting, I condemned such behaviour; however, I did not see the relevance of the provision. 
Under this clause, not only could the licensee be held responsible for any malpractice in that sense, but it seems that his former associates could also be held responsible. Again, I am concerned about the power of the OFT in that regard, especially when the clause and subsection seem rather vague and open ended. I would appreciate the Minister's explanation as to why that particular wording is in the Bill. It is not the only instance of it, but this is probably where it is of most concern.

Gerry Sutcliffe: I understand the consistency with which the hon. Gentleman approaches the issue relating to the powers of the OFT. Amendment No. 46 would severely limit the effectiveness and flexibility of the OFT's power to impose requirements on licensees. It would reduce the considerable protection that goes to the heart of what we are trying to achieve, as the OFT's ability to improve the conduct of licensed business would be curtailed.
The clause refers to associates and former associates of licensees, as well as to the licensees themselves. This is because sometimes a person who is an associate of an unfit person applies for a licence. The definition of associate may be useful: it is found in section 184 of the 1974 Act and means a person's husband or wife, or his relative or their spouse, or a person in partnership with him, or that person's spouse.

Laurence Robertson: I may have interrupted the Minister too early, as he might well explain what I am about to ask. This may sound ridiculous, considering the Minister's explanation, but can ''former associate'' refer to a former spouse? My concern is about the former associate.

Gerry Sutcliffe: The hon. Gentleman's question has been taken in the context of the comments about the roles and duties of the OFT to operate fairly and to give reasons why it has chosen a particular route. The words ''former associate'' give the OFT maximum flexibility as regards the powers to impose requirements for the licensee to improve the way that they operate.
One example is a second-hand car dealer being refused a licence. If his son then applied for a licence, the OFT might wish to impose a requirement restricting the father's involvement in the provision  of credit in his son's business. The power does not mean that the OFT can interfere with the business of an associate of a licensee; a requirement must relate to the licensed business. The OFT will publish guidance on how it will use those powers, and I understand that explanatory notes on that guidance have been given to Committee members. 
The requirements can be referred to the appeals tribunal, which provides a sufficient safeguard against the OFT exercising those powers unreasonably. The safeguards are in place for instances where the OFT exceeds its powers. The amendment will not deliver what the hon. Gentleman wants and will actually weaken the consumer's position, which is not what he is trying to achieve. Safeguards are in place, and we ought to maximise them.

Laurence Robertson: Given the Minister's explanation, I think that he has a point. However, the wording is still far too open ended, as a former associate who is still alive could, presumably, be a former associate of someone with whom they dealt previously. Will he undertake not to change the clause, but to consider a better way of wording it?

Gerry Sutcliffe: Yes, I will, provided that the hon. Gentleman accepts that we are not trying to limit the consumer protection. We are trying to strike a balance.
The hon. Gentleman made the point about former spouses. Another example would be a sole trader who applies for a licence to carry out credit services for a car showroom. The trader's spouse has recent convictions for car clocking under the Trade Descriptions Act, a history of failure to deal with consumer complaints, and had their licence revoked a year ago. However, the spouse is not involved in the business, and nor is it clear that the spouse is still co-habiting with the applicant. In such a case, the requirement may state that the trader will be granted a consumer credit licence on condition that they do not employ or involve their spouse in any capacity in the licence of the above business. 
There are many examples that could be considered. However, in the spirit in which the hon. Gentleman outlined his amendment—although technically it would not achieve what he wants it to—I will consider a clearer definition. Therefore, I ask him to withdraw his amendment.

Laurence Robertson: Given the Minister's willingness to consider a clearer wording to achieve what he rightly wants to achieve, I am prepared to withdraw my amendment. I am still a little concerned about the provision extending not only to business relationships, but to personal relationships. I can see the point of it, but I can also see the danger. I am unhappy about the open-ended wording but, given the Minister's undertaking, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Sally Keeble: Welcome to the Chair, Mr. Benton. Will my hon. Friend the Minister clarify some issues concerning the workings of the clause, which is part of the section on the further powers of the OFT to regulate the conduct of licensees? I speak from two points of view. First, like other hon. Members I have many constituents who come to me about debt problems. I have seen the difficulties that people face when they get into unreasonable debt or have agreed to completely unreasonable terms because they have borrowed from loan sharks. Secondly, some financial services are available in my constituency, so I have also seen some good practice, and I hope that, through this legislation, that good practice will be extended.
I want to raise some questions about this clause in particular, because it obviously provides extensive powers to the OFT without completely defining all the terms. The last debate made that clear. On Tuesday, the Committee debated the subject of unfair relationships at some length. I completely understand why my hon. Friend did not define the terms of that, because that is down to interpretation and for the courts to decide. However, in agreeing clause 38 and later clauses, we are providing sweeping powers to the OFT without allowing for further scrutiny. 
Often in such circumstances there would be secondary legislation, and we could examine the workings of the provisions in more detail. Legislation does not always work in practice, so the details are important. There is a general consensus that when legislation is passed before a general election, proper examination of the details is under pressure of time constraints. How does my hon. Friend expect the OFT to proceed under the provisions of this and other clauses? What discussions does he expect the OFT to hold with the financial services industry, which employs good practice in dealing with debt advice agencies—which have a particular interest in these matters—and with MPs, who may have strong views about how the powers should be applied? Could the Minister clarify the process, including the factors the OFT might be expected to take into account; how that body should consult before reaching a decision on an unfair relationship; and how it can meet and implement the requirements of the clause?

Gerry Sutcliffe: I am grateful to my hon. Friend the Member for Northampton, North (Ms Keeble) for raising that matter. She did so in the same spirit as the hon. Member for Tewkesbury in tabling his amendment on the powers of the OFT. Hon. Members are correct to point out that the Bill will give increased powers to the OFT. It might, therefore, be helpful to explain why the clause is necessary.
As my hon. Friend mentioned, the clause enables the OFT to provide intermediate sanctions on licensees. Those sanctions are named ''requirements'' for the purpose of the Bill. Those requirements are a new and important tool for the OFT to ensure an effective, targeted licensing regime. Currently, OFT powers are limited to refusal of an application, or the granting of a licence on different terms. It can also vary, revoke or suspend an existing licence. The effect  of those sanctions can be severe; they can prevent people from trading. 
The Office of Fair Trading adheres to the Cabinet Office enforcement concordat in that the regulatory action that it takes must be proportionate to any detriment caused. I have copies available for Committee members should they wish to look at that exciting enforcement concordat, which sets out how the OFT should operate. Currently, the OFT is able to act only in more serious cases where a person is not fit to hold a licence. In many cases, the OFT is powerless to address consumer detriment in cases where withdrawal of a licence would be disproportionate. For example, if there were problems with the sale of credit in only one branch of a national company, it would not be justifiable to revoke the whole of that company's licence. A similar situation occurs where only one employee intimidates customers when collecting debts. Those cases may not be serious enough to call into question the fitness of a person to hold a licence, but the OFT should be able to protect consumers. The clause provides that the OFT may impose requirements on licensees if it is dissatisfied with a matter related to the business.

Sally Keeble: Would my hon. Friend elaborate on the processes and consultation that he would expect the OFT to employ in reaching decisions on how it can implement its new powers? Who will be consulted?

Gerry Sutcliffe: I shall come to that matter. It is worthwhile going through the clause before I come to that point.
The clause provides that the OFT may impose requirements on licensees if it is dissatisfied with a matter related to the business. Requirement takes the form of a notice requiring the licensee to do, not to do, or to cease doing something. That must relate to a licensable business. The requirement must also address the matter with which the OFT is dissatisfied, or it must ensure that the stated problem—or a similar one—does not arise. The OFT could use that power to address a wide range of problems. 
Certain employees may have problems explaining credit agreements to customers, so a requirement for training employees could be imposed. That might provide that sales representatives in a named branch are trained to inform consumers of how they can cancel their agreements. For debt collectors whose employees unfairly pressurise consumers by calling very late at night, there may be a requirement to stipulate that they should only call between 8 am and 8 pm. A requirement may also refer to a person other than the licensee: for example, employees such as those in the examples I have just used. However, the requirement would be addressed to, and be binding on, the licensee, and it could require a particular person not to undertake a specific activity, such as collecting debt in person. 
The OFT may take steps to impose a requirement alongside the application process, so that it will bite as soon as the license is issued. That also explains why the clause refers to proposals to carry on a business as well as to a business that already exists. Therefore requirements are vital new tools for the OFT in  encouraging a targeted and, I stress, proportionate licensing regime. 
Returning to my hon. Friend's point, the OFT will publish the draft guidance on its website after the Bill has been passed. That guidance will be similar to the OFT's notes on requirements, which have already been provided to the Committee. The OFT will also send out the draft to interested parties, such as trade associations, consumer organisations and many other bodies that my hon. Friend will recognise as having been heavily involved in the consultation on the White Paper and the Bill. I am confident, therefore, that those who want to take a view on those drafts will be able to do so. That consultation will be in accordance with Cabinet Office guidelines, and there will be at least 12 weeks for comments. The OFT will be able to speak to people who have queries, so there will be opportunity for great debate. 
The OFT will then take on board those comments and will publish the final version of the guidance. It will be able to justify why it has come to a particular conclusion. The OFT will also have the power to amend the guidance. Therefore if, following publication, it became evident that clarification were needed, the OFT could make that change. 
Those safeguards are sufficient to allow the guidelines to be challenged and for consultation to have taken place. I resist again the temptation into which my hon. Friend has dragged me. I will neither decry nor describe unfairness. The Committee did so quite eloquently on Tuesday. 
I hope that having heard the explanations, hon. Members will accept the clause. 
Question put and agreed to. 
Clause 38 ordered to stand part of the Bill. 
Clauses 39 to 41 ordered to stand part of the Bill.

Clause 42 - Guidance on Requirements

Laurence Robertson: I beg to move amendment No. 33, in clause 42, page 33, line 27, leave out subsection (3) and insert—
'(3) The OFT shall have the duty to take all reasonable steps to ensure that the revised guidance is brought to the attention of those likely to be affected by it.'.

Joe Benton: With this it will be convenient to discuss the following amendments:
No. 34, in clause 42, page 33, line 31, at end insert 
', which shall include a representative sample of those likely to be affected by it.'. 
No. 43, in clause 54, page 44, line 39, at end insert 
', which shall include a representative sample of those likely to be affected by it.'.

Laurence Robertson: These are technical amendments. Clause 42 concerns guidance on requirements of licensees, whereas clause 54 relates to statement of policy in relation to civil penalties. The amendments seek to place on the OFT a duty to take all reasonable steps to ensure that anyone who is likely to be affected by the guidance is notified. When drawing up that guidance the OFT should also have a duty to consult  such persons as it thinks fit. However, that is already in the Bill. I seek only to add to that to include a representative sample of those whom it is likely to affect.
What does the Minister have to say about technical amendments? I reckon I can guess, but perhaps they will be moved.

Alistair Burt: May I say, Mr. Benton, how much I welcome being under your guidance this morning? I apologise to the Committee for not being here for the earlier parts of this important Bill. I particularly welcome the presence of the Minister. He and I go back many years, largely through our friendship on the football pitch. We have been regular performers, if I can use that word in the context of the parliamentary football team. The Minister has established an excellent reputation as a stopper of first rank. Between the sticks, I must say that the Minister's skills at preventing things getting past him have become legendary in the dressing room. Seeing him in action and how he manages to hold up the skilful interventions of my hon. Friend the Member for Tewkesbury, I realise that his powers of stopping things are not confined to the football pitch. It is a great pleasure to see a friend in that position.

Laurence Robertson: Does the Minister always have the benefit of the officials on his side?

Gerry Sutcliffe: Usually.

Alistair Burt: If the impartiality, wisdom and skill of the official who presides over the Committee this morning were transferred to the football team, I am sure the Wobblers would have won many more games than we have.
I support my hon. Friend on the technical amendments. Like the majority of the Committee, I welcome the balance of the Bill, which is designed to protect consumers further, for reasons set out on Second Reading and in earlier meetings of the Committee. All of us have, on occasion, seen constituents in extraordinary distress over agreements they have entered into—sometimes unwisely with full knowledge, sometimes unwisely lacking knowledge—and who have ended up in situations that they would rather not be in. We have been involved not only professionally, but sometimes with a degree of personal upset in trying to deal with the mess that some people get themselves into. 
My history on these issues goes back many years, and I commend the activities of Credit Action, people like Keith Tondeur who have spent a lifetime working with those in debt, and Bob Holman in Easterhouse, whose work was recognised in some of our briefings. They have worked with some of the poorest people in dealing with those problems. 
However, credit exists and is necessary for many people to get through particular difficulties. The aim of the Bill is not to set up an adversarial system, where the Government and Parliament take the position that credit is somehow instinctively wrong and dangerous. It is not that we must be overwhelmingly on the side of  those who receive credit to the extent that those providing it feel that all their bona fides are questioned. That will not enable us to get to the heart of the matter, which is to target those who are the most dangerous to people in the poorest position. 
The point of my support for the technical amendments is that it is recognised that the powers of the OFT have been significantly strengthened by the Bill, giving sweeping new opportunities for that body to declare its dissatisfaction with those who have caused harm. To redress the balance, the amendments enable the public and credit providers to have the assurance that they will specifically be involved in the consultation on the guidance to cover their industry. That should help to convince them that it is not an adversarial situation, in which they are permanently and exclusively in the dock, and should ensure that those responsible in the industry have an opportunity to ensure that rapier-like guidance goes to the heart of the problems and that those who must be caught are caught. 
Much of my experience is that our constituents' problems have arisen from ambiguities or misunderstandings. 
Accordingly, it is incumbent on us to ensure that all possibility of ambiguity and misunderstanding is removed. We have seen how people have been exploited if rules and wording have been unclear. Those who have power over debtors have been able to exploit that to their own advantage. 
It would help if those in the business of giving credit were involved in the consultations on the Bill and on the publication of guidance. Greater involvement would prevent ambiguity and misunderstanding, and would make clearer the purpose of the Bill.

Gerry Sutcliffe: I thank the hon. Member for North-East Bedfordshire (Alistair Burt) for his kind comments about my footballing prowess. We were together in defeat on Monday of this week at West Ham, when the parliamentary team played a team of Holocaust survivors and their relatives. That was quite an emotional occasion, considering the commemorations that have taken place this week.

Alistair Burt: It was truly an occasion when the result did not matter.

Gerry Sutcliffe: Indeed. The hon. Gentleman mentioned my skills in stopping shots or, more recently, my inability to stop shots, given my advancing years. I pay tribute to his skills in making runs that take people's eyes off the ball and cause defenders not to look where they should because they have been hoodwinked—I will not say by a sly one—by a wonderful run by the hon. Gentleman in the attacking position. He will understand why I do not accept the amendment so eloquently moved by him and his colleagues. However, he is right that we must achieve the best score.
Earlier, I explained in answer to a question from my hon. Friend the Member for Northampton, North how I thought the OFT would operate. I talked about the effect of the enforcement concordat on how the  OFT should operate. I am not sure that the amendments would effect the change that the hon. Members for Tewkesbury and for North-East Bedfordshire want. The clause as it stands will achieve what they want, and the amendment adds little to it. 
Guidance will be published to bring matters to the attention of those likely to be affected. That means that it will be available on the OFT's web site; it can also be obtained in hard copy. That allows anyone interested in or affected by the guidance to get a copy. Trade associations will also publicise the guidance to their members. I hope that the OFT will consider hon. Members' suggestions. 
That goes to the heart of our discussions on the Consumer Credit White Paper and on the Bill. I have attended many meetings, as have Opposition Members, with organisations representing small and large lenders involved in the credit business.

John Battle: I am sure that the Minister is aware that in a research report published yesterday by Liverpool John Moores University and sponsored by the Co-operative Bank, the author, researcher Paul Jones, listed not only the usual credit companies, but also buy-back stores, cheque cashers, home credit companies, pawnbrokers, telebanks, unauthorised lenders and weekly repayment shops. A host of people massively overcharge the poor. I am not convinced by my hon. Friend's argument that it is simply a case of ambiguity. In some cases it is a deliberate attempt to get money off the poorest. Would the OFT's powers cover such businesses? If he can assure me of that I would be grateful.

Gerry Sutcliffe: That is my understanding. Those are the people providing credit, and it is important that the OFT's new powers are proportionate to what they achieve, and that in the preparation of the draft guidance those affected have the right to have their views taken into consideration.
The amendment does not take us any further forward, but it is right that the hon. Gentlemen put their concerns on record. When the Bill becomes law they should inform the interested parties about what needs to be done about the draft guidance. I hope that, in that spirit, they will withdraw the amendment. The amendment is not necessary, as I have explained in detail the powers of the OFT and how they will operate.

Laurence Robertson: I am grateful for the Minister's explanation. I did say that mine was a technical amendment, although ''probing'' might have been a better word. I am grateful to my hon. Friend for his eloquent argument in favour of some degree of certainty that would lead to protection. I am concerned that people should contribute to the drawing up of the guidelines; not merely because I do not want the OFT to be too powerful, but because I want consumers and licensees to make a fair contribution. I am sure that the Minister will ensure that that is the case. Therefore, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 42 ordered to stand part of the Bill. 
Clauses 43 to 46 ordered to stand part of the Bill.

Clause 47 - POWER OF OFT TO REQUIRE ACCESS TO PREMISES

Laurence Robertson: I beg to move amendment No. 35, in clause 47, page 38, line 27, at end insert—
'(7A) It shall be the duty of the OFT to take all reasonable steps to ensure that its own officers, or those of the enforcement agency, shall, when entering and while on the premises by virtue of this section, at all times behave in a reasonable and professional manner.'. 
I assure the Minister that I shall not press the amendment to a Division, as it, too, is a probing amendment. However, it is a continuation of my concern about the OFT. Clause 47 gives the OFT power to require access to premises; clause 48 gives the OFT power of entry to premises under warrant. That is quite an extension of the OFT's powers. They are, I suppose, similar to the powers of Her Majesty's Customs and Excise; its considerable powers are familiar to any businessman. Perhaps they are required; I do not know. 
Amendment No.35 requires the OFT to ensure that anyone entering premises, either as their own agent or as agents of other enforcement authorities, should behave in a proper and professional manner. That is not an unreasonable requirement. It is a probing amendment because there are many requirements on business and on licensees to co-operate. I am, however, concerned about the powers granted to the OFT. I ask the Minister to address not merely the amendment, but also to give the Committee an explanation of what supervision he envisages for the OFT when it has such powers of entry. It will concern licensees greatly.

Gerry Sutcliffe: Once again, I am grateful to the hon. Member for Tewkesbury for moving the amendment; I accept that it is a probing amendment. I do not wish to underline too much his concerns about the OFT, but I should set out how the OFT should behave when exercising its new powers under the Act.
The hon. Gentleman is of the view that nobody can control the OFT. The OFT is an independent regulatory body established under the Enterprise Act 2002 and is fully accountable to Parliament, reporting annually to the Secretary of State for the Department of Trade and Industry and appearing before relevant parliamentary committees. Indeed, several meetings take place between OFT officials, DTI officials and Ministers.

Alistair Burt: In replying to my hon. Friend, I would appreciate it if the Minister would tell us why this power is being sought. Why can the OFT not rely on other powers, including the power of discovery, in order to produce documents at an appropriate stage? Why have representations been made specifically requiring such an increase in the OFT's powers?

Gerry Sutcliffe: I appreciate the spirit in which the hon. Gentleman asks those questions. As I have said, the OFT already has many powers under the Enterprise Act 2002, but I can reassure the Committee that the Bill contains the appropriate checks and balances required to regulate the  behaviour of OFT officers and those acting on the OFT's behalf.
First, under clause 50, anything done by an enforcement officer acting on behalf of the OFT will be treated as if it had been done by an officer of the OFT. Secondly, a licensee would have grounds for appeal in the highly and, I hope, unlikely event of an officer behaving in anything other than a reasonable and professional manner. A licensee might be able to appeal against a decision if the OFT sought to use evidence in an unreasonable and unprofessional manner. Thirdly, officers of the OFT, like all public servants, are bound to act reasonably and professionally at all times. If they do not, they can be reported to the parliamentary ombudsman. Administrative law imposes a general duty on public bodies to act reasonably. 
In addition to those checks and balances, I would like to provide further reassurance to hon. Members. The OFT has similar powers of access to premises under cartel investigations and, despite having no specific legislative duty, OFT officers have behaved responsibly and professionally when conducting visits for these investigations. There is no reason to believe that OFT officers will act any differently when conducting licensing visits. Therefore, together with all the checks and balances already in place, the amendment—which I accept is a probing amendment—is unnecessary. 
It is important for the OFT to have those powers. I was asked why we are giving people the power to enter business premises at all. In some cases fitness can be assessed most effectively and efficiently by an enforcement officer visiting the premises of a licensee and gaining access. The powers already exist under the Enterprise Act 2002, and we are looking into the licensing regime. Safeguards are in place—a variety of checks and balances already exist. 
Hon. Members have put on record their concerns, which I am sure the OFT will take into consideration in how it operates. I hope that those assurances have reassured the hon. Gentleman, and I ask him to withdraw his amendment.

Laurence Robertson: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 47 ordered to stand part of the Bill.

Clause 48 - ENTRY TO PREMISES UNDER WARRANT

Question proposed, That the clause stand part of the Bill.

Laurence Robertson: Clause 48 deals with entry into premises under warrant. Clause 47 gives the OFT the power to require access to premises, but I presume that clause 48 is subsequent to that should the OFT be refused that entry. However, if the OFT has the legal power to enter premises, does it not naturally flow that  it should be granted a warrant to enter should entry be refused? I wonder whether we are going a little too far.
I understand that there is a need to gather information in order to protect consumers, but would it not be better to allow the courts to draw an inference from a refusal to allow entry, rather than to give them the power to grant a warrant? If some of the wording of the clause had been different, I might not have wished to speak about it. For example, proposed new section 36D(3) states that a warrant gives an officer the right 
''(a) to enter the premises specified in the warrant;
(b) to search the premises and to seize and detain any information or documents appearing to be information or documents specified in the warrant or information or documents of a description so specified''.
If the court has such a degree of detail, is there a need to enter the premises in the first instance? It also provides for the power 
''to use such force as may be reasonably necessary.''
That alarms me. It is not clear who is allowed to use such force. Is it an officer of the OFT? 
Perhaps I am getting into an area that I do not quite understand, but the wording in the Bill on the right to obtain a warrant and to enter premises alarms me. I wonder whether such officers will be of a certain description or given a certain legal right. I am troubled by that, and before accepting the clause, I would like an explanation of why it is felt that the courts should be able to issue such a warrant and, more particularly, why there is a need for some of the wording in the Bill.

Alistair Burt: I wish to reinforce the concerns raised by my hon. Friend. This issue represents another example of the extension of powers. With regard to my earlier question, if the information is not available to the Committee today, perhaps the Minister could write to Committee members. What circumstances have arisen regarding the supervisory authorities so that they now require such powers? Are there occasions when the authorities have been convinced that some irregularity exists, when information was available that would help in the pursuance of a case against someone whom they wished to charge under this or a similar Act, and they simply failed to obtain it because they were not quick enough or because the process of discovery through civil proceedings did not bring that information to light? This is quite heavy stuff.
None of us would resist giving the authorities the ability to acquire information in circumstances where people have been badly let down or are being adversely affected by the inappropriate activities of those who, alas, sometimes operate in the industry. However, the powers are very extensive; people with a warrant will be able to knock on doors, enter premises and seize whatever they choose. If the powers are justified, my concern is to establish where the need has, technically, come from. What have the authorities said to the Government to show that they need extra powers in addition to those that they already possess? In the general context of the Bill, it would be helpful—bearing in mind the powers that we are seeking to exercise on behalf of consumers, who are the worst hit  when things go wrong—if some evidence could be given as to why such sweeping powers are necessary.

Gerry Sutcliffe: I agree with the hon. Member for North East Bedfordshire that it might be worthwhile to write to Committee Members to set out the reasons for the powers. I shall try to deal with that matter, but to reassure hon. Members, it may be better to provide a more detailed written explanation of why it is important to provide for such powers.
The powers will be invoked only once the proper procedure has been exhausted, and the authorities have failed to gain access via their existing powers. The clause addresses the circumstances in which an enforcement officer can enter premises with a warrant obtained by the OFT and the procedure required for that. Under certain circumstances, the OFT may apply to a justice of the peace for a warrant to search premises. That justice of the peace must be convinced that such action is reasonable. In Scotland, applications must be made to a sheriff. The OFT must have reasonable grounds to believe that there is information on those premises that is required under section 36B. The OFT must also have reasonable grounds to believe that if a requirement to provide information were imposed, it would not be complied with or the documents or information in question would be tampered with. Most people will act reasonably in those situations. 
Many hon. Members have mentioned loan sharks and disreputable people. The provisions concern linkage to the licensing regimes. It might be that reasonable force applies to opening a locked cupboard where information is stored. The officer responsible for carrying out the warrant could enter and search the premises. He can seize and detain any information or documents of the description specified in the warrant. The officer would then be able to act to secure the protection of the information or documents and prevent interference with them. Those powers are subject to the definition of reasonable force, which applies to other powers in the Enterprise and Competition Acts.

Laurence Robertson: I appreciate the Minister's attempt to define reasonable force, which could simply mean breaking open a locked cupboard, but it could also mean much more. If I may draw an analogy, we had a spirited debate recently in Parliament about the use of reasonable force to protect one's home, and there is much uncertainty about what that term means. It troubles me that reasonable force may include much more than breaking open a locked cupboard. I am concerned about giving that degree of power, which ordinarily is given only to police officers—who are directly accountable—for entering premises. What grade of officer will be given the power to use reasonable force? I am very troubled by subsection (3)(d), and I ask the Minister whether he is prepared to reconsider it.

Gerry Sutcliffe: The short answer is no. That is not being unreasonable because the powers are commensurate with our goals. The hon. Member for Richmond Park (Dr. Tonge) spoke earlier about prevention being a good cure—to ensure that things do not happen. When I mentioned the powers of the  Enterprise and Competition Acts, I was referring to cartels. Those are the same powers that we have included in the clause. The OFT must have reasonable grounds; it must convince the legal jurisdiction that it has reasonable grounds; and it must operate—as was mentioned during the debate on an earlier clause—in a professional and reasonable manner. I reassure hon. Members that that was my thinking when I set out the written conditions and situations.
I worry about the hon. Member for Tewkesbury's concerns over the powers of the OFT, which are probably creating an imbalance in his thought patterns. I do not mean that discourteously, although it may sound that way. It is a safeguard that all reasonable steps to get to that position are being taken. Licensees who give credit to people who, in certain circumstances, would be very vulnerable must be given the proper opportunity to gain information that is required to ascertain whether those people are fit borrowers. OFT staff are also told that force can never be used against people. That should reassure hon. Members.

Alistair Burt: What would happen if someone were to stand in front of the cupboard?

Gerry Sutcliffe: If an illegal use of force were an issue, there are other mechanisms, such as phoning the police or asking OFT officers for assistance. Through a series of reasonable processes that are designed to elicit information, people will have been asked to do the right thing. However, a consumer could have been seriously harmed, and we must ensure that the OFT has the necessary powers. It could be that groups of people—cartels—may be operating in tandem to damage consumers, and legislative powers already exist relating to cartels.
I acknowledge the views of the hon. Members for Tewkesbury and for North-East Bedfordshire, but they may be overplaying the issue, albeit in the right way. Sufficient safeguards are in place. I shall write to the Committee and give details about situations in which these powers will be used.

Laurence Robertson: I am sorry if the Minister thinks that I have become unbalanced. I assure him that I am not unbalanced—not in this instance anyway.
Proposed new section 36D(3)(b) states that the warrant gives the right 
''to search the premises and to seize and detain any information . . . specified in the warrant''.
Therefore courts are already aware of the documents that are required. In a short but telling intervention, my hon. Friend the Member for North-East Bedfordshire highlighted the uncertain nature of subsection (3)(d). What happens if a licensee stands in front of a cupboard or at a front door? The Minister tells us that force cannot be used against that person. Courts know what documents are required, and given that it is normal practice for them to call for documents, would it not be better to do that when the case comes to court?

Gerry Sutcliffe: That would complicate the situation unnecessarily. OFT officers are bound to act reasonably and professionally, so there are  safeguards. The OFT must convince the court about the reasonableness of the request for information. People must be protected from rogues.

Sally Keeble: How would my hon. Friend rate the chances of an incriminating document that is held by a loan shark lasting long enough to be used in a court case? I would rate the chances at zero.

Gerry Sutcliffe: My hon. Friend may be right, and that explains why the OFT should have those powers. I have tried to describe the circumstances, and I have offered to write to the Committee giving further details. I have acted as reasonably and professionally as possible.

Alistair Burt: I acknowledge the perfect good sense of the hon. Member for Northampton, North. However, the same worries would apply when a warrant application was made. If a rogue had received a series of written applications requesting information and had refused to co-operate, documents could still go missing. As the hon. Lady said, people who do not wish to comply will take steps to remove incriminating evidence. That could apply at any stage in the process, and documents may have disappeared by the time the application is made. My hon. Friend the Member for Tewkesbury and I recognise that there are powers to catch rogues, but we want to ensure that the right people are targeted. Powers should not be so sweeping that innocent people are affected. The law should not be brought into disrepute by using the over-powerful arm of the state in the wrong context.

Gerry Sutcliffe: This is not about an over-powerful state. This is about achieving a necessary balance; it is about protecting documents that could be tampered with, even though those documents may be destroyed. Hon. Members are right to have probed me. My powers of eloquence will either persuade them or otherwise on this matter, and I hope that the Committee will support the clause.
Question put and agreed to. 
Clause 48 ordered to stand part of the Bill. 
Clauses 49 and 50 ordered to stand part of the Bill.

Clause 51 - CONSEQUENTIAL AMENDMENTS

Laurence Robertson: I beg to move amendment No. 36, in clause 51, page 42, line 43, at end add—
'(9) The OFT shall maintain a record of all visits to premises carried out by virtue of the relevant sections of this Act, and those records shall be made available to the appeal authorities set up by this Act.'. 
This relates to records of visits to premises. It is desirable for the OFT to maintain a record of all visits to premises carried out by virtue of the relevant proposed new sections to be included in the 1974 Act. That would include voluntary visits to premises—when the OFT does not have a warrant—or visits when it has a warrant. It would make those records  available to the appeal authorities that the Bill will set up. 
This is not an assault on the OFT; it might actually help the OFT in certain deliberations. I do not intend to speak to the amendment for long. I request only that the Minister consider whether it might be helpful.

Gerry Sutcliffe: The hon. Gentleman will not be surprised to hear that I agree that the OFT should maintain records of monitoring visits. I reassure him that that will happen even without his amendment. Every monitoring visit that is undertaken by the OFT, or by officers acting on its behalf, will be recorded in writing. That is essential if the evidence gained is to be used to monitor fitness. Without the written record the visits are useless. Any records that relate to licensing decisions will be made available to the appeals tribunal, should the need arise. Those will include records of the monitoring visits. I hope that I have assured the hon. Gentleman that his amendment is not necessary and that I can persuade him to withdraw it. The written record will be used at the tribunal.

Laurence Robertson: I am delighted to hear that. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 51 ordered to stand part of the Bill.

Clause 52 - POWER OF OFT TO IMPOSE CIVIL PENALTIES

Laurence Robertson: I beg to move amendment No. 37, in clause 52, page 43, line 16, at end insert
'This amount may be altered by the Secretary of State by Statutory Instrument.'. 
This issue was raised several times on Second Reading, particularly by Labour. Members. It relates to clause 52(3), which states: 
''The amount of the penalty shall not exceed £50,000.''
It is probably correct to put a figure in the Bill, but Labour. Members were concerned that that figure might not be high enough in certain cases. More particularly, there is no provision in the Bill for the Minister to amend that figure by statutory instrument. It may be that, if we take another 30 years to revisit consumer credit—which we may or may not do; I do not know—that figure of £50,000 could become rather paltry. 
We have relatively low inflation at present, but that may not always be the case, especially if we continue with the level of spending and debt that this Government seem determined to pursue. It might not be long before £50,000 is not much more than a slap on the wrist for some companies. I am trying to help the Minister by tabling the amendment. I am disappointed that none of his hon. Friends did so, because the point was raised several times on Second Reading. 
The amendment does not alter the maximum penalty set out in the Bill. I do not suggest that the figure of £50,000 be changed; I suggest that the Minister should be able to vary the figure in future if he thinks it necessary, given the conditions at the time and, possibly, the seriousness of any offences that may  be committed. We do not know what will happen in future, so it would be helpful for the Minister to have that power. 
I am not normally one for giving too much power to Ministers, but we must be realistic. The Bill could become irrelevant if it is another 30 years before the issue is revisited. Why is that power not in the Bill? The Bill leaves many areas open in which a Minister can intervene; some of which are desirable, some of which perhaps ask too much of a Minister. I am surprised that this subsection cannot be changed, and I look forward to hearing the Minister's explanation.

Alistair Burt: I support my hon. Friend. This is an opportunity to speak, as it were, for the other side in this very balanced Bill. Like my hon. Friend, I do not see the reason for specifying the maximum sum. To give maximum flexibility to the authorities it is necessary to take into account all the aggravating factors that might have led to proceedings being taken in the first place. I shall not reiterate everything that has come up in the Committee, on Second Reading and in our everyday experience. However, we have sometimes found the most distressing circumstances produced by companies that, when their financial affairs are probed, are more than able to stand a substantial fine.
For some very small companies or for those that operate small partnerships or the like this is a deterrent sum. For those who rake in millions of pounds—often in the unfair manner suggested by the right hon. Member for Leeds, West (Mr. Battle)—this would appear to be no more than an occupational hazard. Therefore an opportunity to include flexibility seems useful.

Malcolm Bruce: The amendment is appropriate and should be debated. Does the hon. Gentleman agree that the problem with the Bill is that there are two sanctions? One is a fine of up to £50,000 and the other is the cancellation or withdrawal of the licence. The trouble is that that is a nuclear option for the very large companies for which a £50,000 fine would not be a deterrent. It is incumbent on the Minister to explain how he would deal with the gap between a large fine and the withdrawal of a licence.

Alistair Burt: The hon. Gentleman is absolutely right, and I am sure that the Minister will address his point. We have received briefings that have made it clear that although the powers of the OFT have been based to some degree on the powers of the Financial Services Authority, in similar circumstances the latter body is not limited to a specified amount when considering a fine. This appears to be an appropriate situation to draw a parallel.
The opportunity to fine gives maximum flexibility, bearing in mind all the circumstances of the case, for the authorities to show their concern. No matter how much money certain companies may have, receiving a very large fine would have an exemplary effect in discouraging unfair practices; it would finally hit them where it hurts, and for most commercial companies where it hurts is in the wallet. For those reasons, my hon. Friend's amendment is more than justified, and I  hope that, on balance, we might assist the Minister by giving him the opportunity to respond positively.

Malcolm Bruce: I raised the issue of what the penalty would be applied to, and that also cropped up on Second Reading. In other words, if a company has been pursuing practices that are determined to be in breach of the law, is the penalty a one-off fine for the collective breach or could it be a series of fines for each individual breach? If the latter were the case, a much larger fine could be imposed on a company.
Will the Minister say whether the advice to him is that the courts could apply a ruling in that way? That would substantially alter the effect of the Bill. It is unusual, although not unprecedented, to include a figure in a Bill. It is not often, I must say, that Opposition Members encourage Ministers to introduce secondary legislation, but here it might be appropriate.

Gerry Sutcliffe: I thank hon. Members for trying to assist me. I know that they do it in the proper spirit.

John Battle: Of course.

Gerry Sutcliffe: I meant Opposition members—I am not sure about the Government members. There have been interventions and interventions from them, but, on balance, they have been helpful.
Hon. Members are right to raise the issue of the penalty because there was a great deal of debate on Second Reading about why it should be in the Bill. Issues around the drafting of the clause also related to that confusion. I hope that my explanation will rectify that and prove that the amendment is not required. However, we will go through it to be consistent. 
The amendment concerns the maximum penalty that the OFT can impose for breach of a requirement or an information requirement, and the trigger is that sum of £50,000. On Second Reading, we were asked how we decided on that figure. It was felt that £50,000 would be proportionate to the type of infringements that lead to a penalty, but not all penalties would be that high: it is a limit, not a target. The OFT's guidance will elaborate further, and it will decide on the amount of the penalty. 
In reply to the hon. Member from North-East Bedfordshire, we considered linking the penalty to turnover. Features of the Competition Act, for example, attract penalties of up to 10 per cent. of turnover, but those penalties are for monopoly market power built up over a number of years, which are completely different in nature to the infringements that this power tackles. 
We welcome the hon. Member for Gordon (Malcolm Bruce). He asked me to explain the difference between the options—the nuclear options, as he put it. However, as we discussed on previous clauses, the OFT will seek requirements of licensees if they breach agreements, and it can set individual requirements on one branch in a chain of branches, or on an individual in that branch. If that did not occur, the OFT would move on to penalties if there were many breaches. We would then move to the nuclear option of considering the fitness of that person or organisation to have a licence. 
Clause 53(3) already includes a power for the Secretary of State to amend the maximum. That clause amends section 181 of the 1974 Act to include the maximum civil penalty as one of the provisions on monetary limits that can be amended by a statutory instrument, subject to resolutions of both Houses. As the hon. Member for Tewkesbury said, this is important for future-proofing. I appreciate that the drafting meant that this power was perhaps not immediately evident on Second Reading, but it does what the hon. Member's amendment seeks to do. It is already there; the secondary power will be taken. 
I hope that I have explained the reasoning behind the £50,000 penalty and how the penalty system works with regard to the requirements, the interim arrangements and, finally, the loss of licence. I hope that the hon. Gentleman will now withdraw the amendment.

Laurence Robertson: I am grateful to the Minister for his explanation. I accept that section 181 of the 1974 Act covers the clause. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Laurence Robertson: I beg to move amendment No. 38, in clause 52, page 43, line 23, after 'OFT', insert 'through the courts'.
The amendment gives me a chance to question the Minister. It refers to proposed new section 39A(5)(a), which states that 
''the penalty shall be recoverable by the OFT''.
By adding ''through the courts'' my amendment questions whether that would be the procedure for recovering the penalty. 
It is not immediately obvious what the right of appeal is against the penalty imposed, so will the Minister clarify that? I appreciate that that is not strictly related to the wording of the amendment, but it may help the Committee to have an explanation.

Gerry Sutcliffe: I thank the hon. Gentleman for his amendment; it gives me the opportunity to clarify matters. It is not necessary to specify whether the penalty could be recovered through the courts; that is understood. The OFT asks in its notice for the penalty to be paid in a specified period. If it is not, the OFT may have to take court action to recover the money.
The current framing of the clause means that the OFT is not restricted to going to court to recover the penalty. If it were in the interests of efficiency for the OFT to recover the penalty in another way, we would not want the legislation to prevent it from so doing. I reassure the Committee that however the penalty is recovered, the OFT will act reasonably and properly. Safeguards are in place. Other than using the courts, the OFT may employ a debt collector, although it would always ensure that those working on its behalf behaved properly, in accordance with the previous clauses. The right of appeal is set out in clause 53(2). 
I hope that the hon. Gentleman will withdraw his amendment.

Laurence Robertson: Will the Minister explain the right of appeal against the penalty that the OFT would impose, if there is such a right?

Gerry Sutcliffe: That is covered by the reference to clause 53(2). If it is not, I shall write to the hon. Gentleman setting out the rights of appeal.

Laurence Robertson: In view of the Minister's explanation and his undertaking to write to me on that issue, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 52 ordered to stand part of the Bill.

Clause 53 - FURTHER PROVISION RELATING TO CIVIL PENALTIES

Laurence Robertson: I beg to move amendment No. 39, in clause 53, page 43, line 41, leave out 'and'.

Joe Benton: With this it will be convenient to discuss amendment No. 40, in clause 53, page 44, line 3, at end insert
'; and informing him of his right of appeal against this penalty.'.

Laurence Robertson: Proposed new section 39B states:
''(1) Before determining to impose a penalty on a person under section 39A the OFT shall give a notice to that person—
(a) informing him that it is minded to impose a penalty on him;
(b) setting out its reasons for being so minded;
(c) stating the proposed amount of the penalty;
(d) setting out its reasons for proposing that amount;
(e) setting out the proposed period for the payment of the penalty; and
(f) inviting him to submit representations to it about the matters mentioned in the preceding paragraphs in accordance with section 34.''
The OFT's notice would be a standard document and would be easy to put together, so the OFT should be obliged to notify the licensee about his right of appeal. I previously asked about the right of appeal, and the Minister said that he would write to me. I do not mean to be pedantic.

Gerry Sutcliffe: That is my fault; I was not clear. The hon. Gentleman is correct. The consumer credit appeals tribunal under clause 55 provides the appeals mechanism. The tribunal will consider credit appeals. I hope that that helps, but I shall write to the hon. Gentleman to clarify things.

Laurence Robertson: I am grateful to the Minister for that helpful introduction, and I would appreciate a more detailed explanation of how things work. I am a little concerned that the Bill is not as clear as it could be, but I am straying into discussion of an amendment that I did not table.
The amendments that I have tabled would require the OFT to clarify the right of appeal. The rather uncertain discussion between the Minister and me suggests that that is not entirely clear. I ask the Committee to require the OFT to notify a person of his right of appeal against the imposition of a civil penalty. The OFT is already required, rightly, to give  details about a penalty that it is minded to impose, and it is not unreasonable to ask it to set out the right of appeal. It follows naturally from what is already in the Bill.

Gerry Sutcliffe: That was a valiant attempt to persuade me to agree to the amendment. I hope that the uncertainty about the right of appeal has been addressed. The hon. Gentleman rightly said that clause 53 sets out the procedure that the OFT must follow in order to impose a civil penalty, and lists what should be included in the OFT's notice to inform a person that it is so minded. Amendment No. 39 is not necessary, and its intention is unclear. As far as I can see, it simply deletes the word ''and'' in the list that appears in clause 53.
Amendment No. 40 proposes that the notice should include a statement that a civil penalty can be appealed. That is not needed; the Consumer Credit Licensing (Representations) Order 1976 sets out what a notice from the OFT of a proposed determination should include, and it stipulates that the right of appeal should be drawn to the attention of the person or persons affected. That statutory instrument will be amended so that it refers to the new tribunal, rather than to the Secretary of State, and it will cover the new determinations provided for in the Bill, such as the power to impose a civil penalty. The current appeal regulations oblige the OFT to send a form that can be used to make that appeal when it gives a clear notice of determination. In future, the Department for Constitutional Affairs will provide a notice of appeal.

Laurence Robertson: I would like the Minister to clarify something that he said about the requirement to notify a person of the right of appeal being in another Act. I hope that I am not misleading the Committee, but I am unsure how the consumer credit appeals tribunal could require the OFT to inform a person of that right, when it was not in existence at the time of that Act.

Gerry Sutcliffe: The appeals mechanism came into existence in the Consumer Credit Act 1974. The provision that the hon. Gentleman requires is covered by the Consumer Credit Licensing (Representations) Order 1976, which sets out what is required by the OFT. The difference will be that we take out the words ''Secretary of State'' and insert the words ''new tribunal''. I ask that he withdraw the amendments.

Laurence Robertson: Okay, but—[Laughter.]

Chris Bryant: Look behind you.

Laurence Robertson: I have been in many small minorities during Divisions of the House of Commons, but a minority of one or two is perhaps going a bit far. I am still a little concerned about the Minister's explanation in as much as the Bill sets out several requirements of the OFT. It would not be over-onerous to set out that final paragraph. It would be a standard document and, in the interests of consolidation and clarification, I do not see that there is a problem.

Gerry Sutcliffe: It must be done under the provisions of the 1976 Order. It is unnecessary to reinsert it; it is already there.

Laurence Robertson: I am happy to accept the Minister's assurance. I wonder whether any of the other matters are set out in other legislation, and, if so, why they are repeated. Perhaps that stretches the point a little too far. [Interruption.] Even though reinforcements have arrived behind me, I shall not press this matter to a Division. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Laurence Robertson: I beg to move amendment No. 41, in clause 53, page 44, line 11, at end insert—
'(c) the effect such a penalty will have on the ability of the person to continue to run the business.'. 
Clause 53 deals with penalties that may be imposed by the OFT. Subsections (2), (2)(a) and (2)(b) state that 
''the OFT shall have regard (amongst other things) to . . . any penalty or fine that has been imposed on that person by another body in relation to the conduct . . . other steps that the OFT has taken or might take under this Part in relation to that conduct.''
I wonder whether it is necessary—it may not be, because the original wording says ''amongst other things''—for the OFT to take into account the continuing ability of the person to run that business. For example, a court could consider whether removing someone's driving licence might be too drastic a measure. If it means that that person could not earn a living, the court might reduce the sentence. 
That brings to mind what the Liberal Democrat spokesman, the hon. Member for Gordon, said about the OFT being neither one thing nor the other. I accept that it can do some things, such as making companies change their conduct. However, the OFT should be able to take account of a company's circumstances in relation to fines. It may not want to impose a heavy fine that could put a company out of business or make it unable to carry on its business. Perhaps that should appear on the face of the Bill.

Gerry Sutcliffe: The amendment gives me an opportunity to reassure the hon. Gentleman and to explain the process for civil penalties. I hope that he will understand why his amendment is unnecessary.
To reiterate the point made by the hon. Member for Gordon, there are three positions. The OFT requires the licensee to change their behaviour in order to avoid any further licensing action; that acts as an incentive for the licensee to improve. These are the requirements: at the penalty stage, a sum of up to £50,000 is in place; if that penalty does not work, there is a sanction to withdraw the licence. The OFT would take into account the impact of a civil penalty when a licensee's ability to run a business was being assessed. Reputable businesses that comply with requirements have nothing to fear; penalties will be imposed only when requirements are breached. 
The philosophy is that if a business is not operated properly, requirements will encourage a change of behaviour. If that does not work, penalties will come into play. If penalties do not work, the ultimate sanction is there. Those are reasonable processes, and appeal mechanisms are also in place, and those measures are set out on the face of the Bill. Given my explanation, I hope that the hon. Gentleman will withdraw his amendment.

Laurence Robertson: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 53 ordered to stand part of the Bill.

Clause 54 - STATEMENT OF POLICY IN

Laurence Robertson: I beg to move amendment No. 42, in clause 54, page 44, line 34, at end insert
', who shall have the power to order that the statement of policy shall be amended if he is not satisfied with it.'. 
Clause 54 concerns a statement of policy in relation to civil penalties, which the OFT is obliged to publish. Proposed new section 39C(3) in the 1974 Act says: 
''No statement of policy shall be published without the approval of the Secretary of State.''
My amendment is partly a probing amendment, although not entirely. I want to test what exactly subsection (3) means. Does it mean that the Secretary of State must be satisfied with the details of that statement? I would be happy if that were the case, because hon. Members will recall that I have just once or twice been slightly critical of the OFT and the extra powers it will gain. I am happy for the Secretary of State to be required to approve the statement before it is published. That is the probing part, to which I would like an answer. 
My amendment, however, goes a little bit further and clarifies subsection (3) if that is not to be the case. It gives the Secretary of State the power to order that the statement of policy be amended if he is not satisfied—in other words, to avoid getting to the point at which he is not satisfied and then nothing seeming to happen from there on. 
That is important, because the OFT's imposition of civil penalties is a serious matter. It may turn out that the OFT is too heavy handed in the way in which it imposes penalties, or it may turn out that it is not heavy handed enough. At some point, the Secretary of State should be able to affect that. I will not go over the horse racing analogy, which hon. Members had to sit through on Tuesday, in which the Secretary of State could not intervene or make any particular difference. However, with a body as powerful as the OFT, the Secretary of State should have some ability to affect what it does. When I say the Secretary of State, I mean that Parliament should have an ability to affect what the OFT does. I would like an explanation of that. 
May I test your patience just for one minute, Mr. Benton? This is the final clause that relates directly to the OFT. I remain concerned by the OFT's power, and  by Parliament's lack of ability to affect what it does. The Minister has said that the OFT frequently appears in front of Select Committees, but we all know that Select Committees do not have any power to affect what the OFT does. They can produce a damning report, and that may or may not happen in the future, but I remain concerned by the lack of parliamentary control over the OFT and by hon. Members' lack of ability to represent their constituents with regard to the way in which the OFT works. I would like to put that on the record. The Bill has added to my concerns in many ways, and I have gone through those concerns in great detail. I will not repeat them now, but I do want to say that I am very concerned about it indeed.

Gerry Sutcliffe: I recognise the problems that the hon. Member for Tewkesbury has had with the OFT, not least the issue around the racing analogy. Cheltenham racecourse is in the hon. Gentleman's constituency, and that clearly could have had an impact on his constituents. I understand his view of the OFT, but I have tried to explain some of the safeguards that are in place that relate to the OFT and its powers, how it reports and how it is accountable to Parliament.
With regard to amendment No. 42, I agree that the Secretary of State should have some control over the statement of policy on civil penalties. The statement of policy will set out details of the circumstances in which the OFT would impose civil penalties and would set out the level of civil penalties. It is right that the Secretary of State should approve a policy statement before it is published, and that is exactly what clause 54 ensures, stating that no statement of policy should be published without the approval of the Secretary of State. In the unlikely event of the Secretary of State's not approving the policy statement, and if the OFT does not make amendments to it, the statement could not be published. Until a statement is published the OFT cannot impose civil penalties on licensees. Therefore the clause offers an additional safeguard. Having been given that assurance, the hon. Gentleman will, I hope, withdraw the amendment.

Laurence Robertson: With the Minister's—I almost said ''Secretary of State's'', although I am sure that that is only one reshuffle away if a general election does not intervene—very clear explanation of how the clause will work, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 54 ordered to stand part of the Bill. 
Further consideration adjourned.—[Mr. Watson.] 
Adjourned accordingly at Six minutes past Eleven o'clock till this day at half-past Two o'clock.